Objectives of environmental and social reporting

Environmental reporting - The aim of environmental reporting is the disclosure of an

organisation's corporate environmental responsibilities and the efects of its activities on
its environment.
Social reporting- The aims of social reporting is to measure and disclose the social
impact of a business' activities. Examples of social measures include:
donations,
employee satisfaction levels and remuneration issues,
community support, and
stakeholder consultation information.
Benefts of environmental and social reporting
a) t demonstrates coherence of overall management strategy to important external
stakeholders.
b) t strengthens stakeholder relations.
c) t increases competitive advantages !the '"rst mover' efect).
d) #ublic recognition for corporate accountability and responsibility.
e) Target setting and external reporting drives continual environmental and social
improvement.
f) Efective self$regulation minimises risk of regulatory intervention.
g) t may improve access to lists of 'preferred suppliers' of buyers %ith green
procurement policies.
h) t reduces corporate risk, %hich may reduce "nancing costs and broaden the
range of investors.
i) t enhances employee morale.
&) mproved pro"tability.
Current reporting requirements
IFRS requirements
'nder ()*s there are no required disclosure re+uirements for environmental
and social matters.
,o%ever, environmental matters ma be disclosed %here they fall under
specifc accounting principles:
$ #rovisions for environmental damage are recognised and contingent liabilities
are disclosed under -* ./ Provisions, Contingent Liabilities and Contingent
Assets.
$ -* 0 Presentation of Financial Statements re+uires disclosure of facts material
to a proper understanding of "nancial statements.
!ational requirements
Some countries require disclosure of environmental performance under
national la%.
The European 'nion's 1usiness )evie% encourages t"e disclosure of key
performance indicators !'2#s') on environmental and employee matters.
#oluntar disclosure
3oluntary disclosure has no% become t"e norm for quoted companies in
certain countries as a result of pressure from sta$e"older groups to give
information about their environmental and social 'footprint'.
Sustainabilit reporting
The initial disclosure of environmental matters has no% expanded into sustainability
reporting %hich integrates environmental, social and economic performance data and
measures !including the economic element of sustainability such as %ages, taxes and
core "nancial statistics).
The guideline for sustainability disclosure is %"e &lobal Reporting Initiative '&RI(. ts
mission is to develop and distribute globally applicable Sustainability Reporting
Guidelines for voluntary use by organisations.
The guidelines cover the reporting on the:
economic,
environmental, and
social
dimensions of a business' activities, products and services.
&RI &uidelines
The 4) published revised *ustainability )eporting 4uidelines !'45') in 6ay 780.. The
4uidelines set out the frame)or$ of a sustainabilit report and ofer t)o options:
Core option and the Compre"ensive option *
0. Core option contains the essential elements of a sustainabilit report. It
provides t"e bac$ground against )"ic" an organisation communicates
the impacts of its economic, environmental and social and governance
performance and impacts.
7. Compre"ensive option builds on t"e Core option by re+uiring additional
disclosures of the organisation's strateg and analsis+ governance+ et"ics
and integrit and full disclosure of performance indicators for all identifed
material ,-spects, !see belo%).
T%o diferent types of disclosures are re+uired by the 4uidelines:
&eneral standard disclosures9
Specifc standard disclosures.